6/20/2008 @ 5:45PM

This Bud's Not For InBev

On Friday Anheuser-Busch saw one of its key players step down, but all is not as it appears. Rather than signal weakness this departure shows that Bud is ready to make a play for Grupo Modelo in order to keep itself from getting taken over by Belgian brewer InBev.

Chief Executive Carlos Fernandez of Mexico’s Grupo Modelo, brewer of Corona, stepped down from the board of St. Louis-based
Anheuser-Busch
on Friday. The two beer producers have a 50-50 joint venture where Anheuser has a non-voting stake in the company that distributes its Budweiser, Bud Light and other products in Mexico.

Fernandez’s resignation came on the same day that Anheuser’s board met in St. Louis to discuss
InBev
‘s $65.00-per share, or $46.4 billion, acquisition offer. Grupo Modelo said that Fernandez resigned from Bud’s board “to avoid the appearance of any conflicts” of interest.

Anheuser, seeking to avoid the embrace of InBev, had wanted to buy the 50.0% stake it did not already own from Grupo Modelo in order to make itself more valuable and less susceptible to a takeover. Grupo Modelo gave the Bud brewer the cold shoulder, wishing to “remain a proudly Mexican company.” (See Modelo Frosty to Anheuser-Busch)

“My expectation is the Anheuser-Busch board will resist the offer,” said Dave Kolpak of Cleveland’s Victory Capital Management. “I think it will be a difficult task because I think it’s a pretty generous offer. I think the board today is getting together to think about ways to resist.”

Separately, Anheuser-Busch announced today that it would buy the 50.0% of its India-based joint venture, founded in early 2007, which it does not already own. Anheuser will buy Crown International’s Crown Beers India, which has a brewery in Hyderabad. The financial terms of the deal were not disclosed.

Shares of Anheuser Busch rose sharply in May amid rumors of the InBev offer. On Friday the stock closed down 38 cents, or .6%, to $60.67, and then fell another 22 cents to $60.67 in after-hours trading. InBev shares traded down 34 cents, or 0.7%, to close at $47.60 in trading in New York.